Page 6 Page 7 FOCUS HR | IR July Update 2026 FOCUS HR | IR July Update 2026 PAYDAY SUPERANNUATION BABY PRIYA’S ACT 2025 PROTECTING PENALTY & OVERTIME RATES ACT 2025 When – 1 July 2026 The Treasury Laws Amendment (Payday Superannuation) Act 2025 and Superannuation Guarantee Charge Amendment Act 2025 were introduced into Parliament on 9 October 2025. From July 2026 employers will generally be required to make superannuation contributions within seven business days of paying employees’ wages and salaries rather than quarterly. The reforms introduce a new concept called “qualifying earnings” (QE), which will be used to calculate both superannuation guarantee contributions and superannuation guarantee charge calculations. Qualifying earnings consist of: • ordinary time earnings; • amounts of ordinary time earnings sacrificed under salary sacrifice arrangements; and • certain payments captured within the extended meaning of employee under the Superannuation Guarantee legislation. The Australian Taxation Office has also published a draft compliance guidance regarding its intended approach during the first year of Payday Super. When – 7 November 2025 The Fair Work Amendment (Baby Priya’s) Act 2025 introduced new protections for employees who experience the stillbirth or death of a child and are entitled to employer-funded paid parental leave. The reforms were introduced following a widely publicised campaign that highlighted a gap in the Fair Work Act where employees could retain access to unpaid parental leave and government-funded parental leave, but could lose access to employer- funded paid parental leave following the death of a child. The legislation is named after Baby Priya, who tragically died at 42 days old. Following her death, her mother’s employer-funded paid parental leave was cancelled, prompting calls for legislative reform to ensure grieving parents did not face uncertainty regarding their leave entitlements during an already traumatic period. The reforms insert a new workplace protection into the Fair Work Act preventing employers from refusing or cancelling employer-funded paid parental leave because an employee’s child is stillborn or dies, where the employee would otherwise have been entitled to that leave under their terms and conditions of employment. The protections apply to employer-funded paid parental leave associated with: • the birth of an employee’s child; • the birth of a child of an employee’s spouse or de facto partner; or • the placement of a child with an employee for adoption. Importantly, the legislation does not create a new entitlement to employer-funded paid parental leave. Rather, it preserves existing entitlements that arise under employment contracts, enterprise agreements, workplace policies or other employment arrangements. The reforms also recognise that employers and employees may have existing arrangements dealing with stillbirth or the death of a child. Certain exceptions apply where employment terms expressly provide for different arrangements. However, employers cannot unilaterally amend employment terms after commencement of the legislation in order to avoid the operation of the new protections. The protections commenced on 7 November 2025 and apply where the stillbirth or death of a child occurs on or after that date. When – 30 August 2025 The Fair Work Amendment (Protecting Penalty and Overtime Rates) Act 2025 received Royal Assent on 29 August 2025 and commenced on 30 August 2025. The legislation restricts the Fair Work Commission’s ability to reduce or roll up overtime and penalty rate entitlements into annualised salary arrangements. The reforms require the Commission to ensure: • specific penalty and overtime rates in modern Awards cannot be reduced; and • modern awards cannot include rolled-up salary arrangements which do not fairly compensate award- reliant employees for the penalty rates and overtime they would have otherwise received. Practical Implications for Employers Employers should review: • payroll systems and automation capability • payroll reconciliation processes • salary sacrifice arrangements • payroll timing and cashflow forecasting and • superannuation reporting systems Practical Implications for Employers Employers should: • review annualised salary arrangements to ensure employees remain no worse off than if they were paid in accordance with Award terms • reassess salary absorption or offset clauses • ensure overtime and penalty entitlements are reconciled accurately (this includes appropriate record keeping) and • review payroll compliance processes Practical Implications for Employers Employers should consider: • reviewing company-paid parental leave entitlements in policies, employment contracts or enterprise agreements with the lens that these now cannot be removed in the case of stillbirth or death of a child • ensuring managers understand the new protections • reviewing workplace processes for handling parental leave following stillbirth or infant death; and • ensuring any decisions regarding parental leave entitlements are consistent with the amended Fair Work Act. Observation The reforms reinforce the broader movement toward real-time payroll compliance and increase administrative and payroll compliance obligations for employers. Observation The legislation reflects increasing political and regulatory concern regarding annualised salary arrangements and payroll compliance transparency. It does not stop employers and employees from entering into annualised salary or individual flexibility arrangements under the Award, but it does add a layer of protection to prevent terms that would leave employees worse off. Observation The reforms reflect an increasing focus on aligning workplace laws with community expectations regarding compassion, psychological wellbeing and employee support during significant life events. Baby Priya’s Act also demonstrates the growing willingness of Parliament to intervene where gaps emerge between statutory leave protections and employer-funded workplace entitlements.
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